Advisers charge for their services in different ways. Sometimes the cost is built into the price of the investments you purchase, sometimes it is added to the cost, and sometimes you pay separately. You should ask for a statement of costs from those advisers who don’t provide one automatically.
There are five different ways you may pay for your financial advice:
1.
Fee-only. Fee-only planners charge a fee, but don’t earn commission on the work they do for you. The fee can be a percentage based on the value of your account or a flat monthly or annual charge for their work. Fee-only advisers don’t charge a commission on what you buy.
2.
Fee-based. Fee-based advisers charge a fee and may also earn commissions on some of the products they sell.
3.
Commissioned. An adviser who works on commission earns a percentage of the sale as payment. The commissions vary based on the stock, bond, mutual fund, or other financial products you buy on their recommendation.
4.
Salaried. Some advisers are paid a salary no matter which investments they sell.
5.
Hourly rates. Some advisers charge hourly rates but not fees.
Good advisers may be paid in any of these ways. Or you can use one type of adviser for planning and another for investing. Most important, you want to be sure that the advice you’re getting is right for you and not just profitable for the financial adviser you hire.
